Medicare premium increases are on everyone’s mind, especially for those on fixed incomes.
But Medicare Part D premium increases and increases in other out-of-pocket costs are hitting lower-income seniors particularly hard. Medicare premium increases are forcing many seniors to reevaluate their insurance coverage. Between new policy changes, fewer plan options, and growing drug prices, the cost of staying covered is becoming harder to bear.
This blog post will explain these recent Medicare premium increases, show you what’s behind them, and give you some tips on how to blunt their impact and save money.
Inflation Driving Part D Medicare Premium Increases
From 2022 to 2025, the average Medicare Part D premium jumped 57%.
That far outpaces the average increase in Social Security benefits over the same period, meaning many beneficiaries are losing ground financially.
In 2024 alone, Part D Medicare premium increases soared to 21%–– more than triple the year’s inflation rate. In states like California and New York, beneficiaries saw increases of 122% and 116%, respectively.
But these extreme hikes aren’t anomalies—they reflect real national trends affecting Medicare beneficiaries across the country.
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Medicare Part D Deductibles Are Increasing, Too
Many Part D plans also increased their annual deductibles to the 2025 cap of $590.
This means you’ll have to pay more out of pocket before your Part D drug coverage kicks in. Meanwhile, copays and coinsurance amounts for brand-name drugs have increased, especially for medications in the higher tiers.
Making matters worse, the number of stand-alone Part D plans dropped from 782 in 2022 to fewer than 600 in 2025. That means fewer choices, less competition, and rising costs for seniors who depend on prescription coverage.
TANSTAAFL: No Free Lunch in Health Care
There’s an old saying in economics: “There ain’t no such thing as a free lunch” –– commonly abbreviated as “TANSTAAFL.”
That’s true of government programs and it’s true of insurance, as well. For example, the Inflation Reduction Act (IRA) of 2022 was originally promoted as a way to lower out-of-pocket costs for Medicare enrollees.
The law introduced a number of new benefits: a $35 cap on monthly insulin costs, a $2,000 annual maximum for out-of-pocket drug costs starting in 2025, and the elimination of the 5% coinsurance requirement in the catastrophic coverage phase. Insurers now cover a larger share of high drug costs.
But while these changes offered real relief at the pharmacy counter, they came at a price. And in 2025, seniors are paying the piper. To recoup the difference, Part D insurance companies have sharply increased your out-of-pocket costs in the form of higher premiums, higher deductibles, and more stringent cost-sharing requirements.
Furthermore, lawmakers touting the Inflation Reduction Act projected that IRA reforms would hold premium increases to no more than 6% annually.
Obviously, their estimates were way off. Part D Medicare premiums increased sharply, while the number of participating plans plummeted. This reduces choice and competition among insurers, putting further upward pressure on Part D premiums and out-of-pocket costs.
For every dollar the government shifts out of the program, that dollar needs to be accounted for somewhere else. In short, “there ain’t no such thing as a free lunch.”
Beware of Hidden Medicare Premium Increases
The sticker shock doesn’t stop at monthly premiums.
Part D insurers are compensating for these higher costs in a variety of ways – some of which are deeply hidden in the fine print.
For example, some Part D plans are switching from flat copays to percentage-based coinsurance for expensive drugs. This means patients now pay a percentage of a drug’s retail cost, which can reach hundreds or even thousands of dollars.
Many plans have also reshuffled their formulary tiers. Drugs that were previously classified in lower tiers with modest copays are now categorized in higher tiers with much greater out-of-pocket costs. This especially affects brand-name and specialty medications.
Compounding the issue, insurers are ramping up utilization management tools like prior authorizations and step therapy requirements. Patients may be required to try and fail on cheaper alternatives before getting the treatment their doctor originally prescribed.
Meanwhile, the list of costly, cutting-edge medications continues to grow. Gene therapies, cancer treatments, and GLP-1 weight-loss and diabetes drugs like Wegovy and Mounjaro often carry price tags as high as $1,000 per fill.
Covering these drugs drives up overall program costs—and ultimately, the premiums and out-of-pocket costs you’ll pay.
Medicare Part D Outlook: Premiums Up, Options Down
Starting in 2025, the Medicare Part D out-of-pocket maximum is officially capped at $2,000.
This will help beneficiaries who face high drug costs, but it will increase the financial burden on insurers.
As plan sponsors adjust to this new liability, they’re likely to continue raising premiums, tightening formularies, and restricting access to certain high-cost drugs.
Cost pressures may force more insurers out of the Part D market, leaving seniors with fewer and fewer options to shop around and avoid large increases.
Even Medicare Advantage plans, which typically bundle drug coverage, are beginning to scale back supplemental benefits or raise plan premiums in response to rising drug costs. In some markets, carriers may exit entirely, further reducing access.
Trump Administration Initiatives
With President Donald Trump back in office and Robert F. Kennedy Jr. confirmed as the Secretary of Health and Human Services, the new administration is actively working to contain drug prices and Part D costs.
One of their major policy shifts is a proposal to delay Medicare price negotiations for small-molecule drugs from 9 years to 13 years, aligning with the negotiation timeline for biologic drugs. This aims to support pharmaceutical innovation while slowing cost growth.
The Trump Administration is also fast-tracking approvals for generic and biosimilar medications, which typically enter the market at a significantly lower cost. This increased competition can help drive down prices across drug classes.
States are being encouraged to set up drug importation programs to bring in medications from countries like Canada, where prices are often much lower – though so far only Florida has received approval. Other states are applying, and guidance has made it easier for states to begin these programs.
Additionally, Secretary Kennedy has also announced a full review of Medicare coverage for high-cost medications, including GLP-1s used for weight loss. He’s expressed concern about covering drugs that pose long-term fiscal risks to the Medicare program.
The administration is pushing for site-neutral payments, ensuring Medicare pays the same amount for a drug regardless of where it is administered—whether in a hospital, outpatient clinic, or doctor’s office. This could reduce unnecessary markups and lower program spending.
How to Beat Medicare Premium Increases
Medicare premium increases aren’t just a policy issue—they are a critical household budget issue for millions of Americans.
Fortunately, there are steps you can take to lower your drug costs. For example, each year, during Medicare Open Enrollment (Oct. 15–Dec. 7), you can review your current plan and switch to one that better fits your needs.
Here’s how to do a Medicare Part D plan checkup and review:
1. Read your Annual Notice of Change letter.
Each year, usually in September, your insurance company will send you an annual notice of change letter. This letter will detail any relevant changes in your Medicare coverage and pricing.
2. Look up your medications on the plan’s formulary.
The formulary is your plan’s list of covered drugs. Make sure your prescriptions are listed, and check what price tier they fall into. This affects your out-of-pocket costs.
3. Check pricing and copays.
This information will be on the formulary. But if your plan sharply increases your out-of-pocket costs for a medication you need, you can shop around to find a plan that better fits your needs.
4. Check your plan’s network.
Make sure the network includes a pharmacy that’s convenient for you.
Finally, check for other non-financial provisions and restrictions like step therapy prior authorization requirements, and other restrictions that could delay access to treatment.
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How to Get Help Dealing With Part D Medicare Premium Increases
Remember, Medicare Part D plan costs and coverage change every year.
Being on the wrong plan can potentially cost you thousands of dollars over time.
Are you affected by Part D Medicare Part D premiums? It’s a good idea to look at other alternatives. For free expert assistance, make an appointment with a MediGap Advisors Personal Benefits Manager today.
If you’re feeling overwhelmed by the changes to Medicare Part D—or want to make sure you’re not overpaying, don’t hesitate to reach out.
For Further Reading:
Tom Lockwood is a Personal Benefits Manager at MediGap Advisors. Tom has a passion for bringing clarity to those confused about Medicare. He is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Tom on his Bio page.